–Adds Quotes From ECB Governing Council Member Ordonez

BASEL, Switzerland (MNI) – European Central Bank President
Jean-Claude Trichet Monday embraced the results of stress tests
conducted on 91 European banks that were published Friday evening.

“I have to say that I found it impressive that at the same time all
over Europe 27 capitals were communicating the same template, and from
that standpoint it was really a very important transparency exercise
that in the ECB we appreciate,” Trichet told reporters after a
closed-door meeting of the Basel Committee oversight body at the Bank
for International Settlements.

The results showed 7 of the 91 banks failed to meet the standard of
a 6% tier-one capital ratio under the adverse financial and
macroeconomic circumstances simulated in the tests. Of the seven banks
that failed, five were savings banks in Spain. The other two were
Germany’s Hypo-Real Estate Bank and Greece’s ATE (Agricultural Bank).

ECB Governing Council member Miguel Angel Fernandez Ordonez, who
heads the Bank of Spain, also gave the tests two thumbs up, saying they
would be enough to restore investor confidence “for sure.”

“It has been a good step not just for the short run or the
reaction, which has been relatively good in the market, but I think it
is a good long-term investment because in the end, [the market] has more
information, and markets work very well with more information,” Ordonez
told reporters as he left the same meeting attended by Trichet and
numerous other central bankers.

Asked about criticism of the stress tests, Ordonez noted that after
the tests conducted on U.S. banks, “everyone said it is not tough enough
and so on.” But having more rather than less information is better,
Ordonez said. “And Spain did everything to provide the information on
100% of banks, 100% of cajas,” he added.

But Ordonez noted that it wasn’t only financial institutions that
needed to improve. “We have to work at the level of the Eurozone and I
think it’s what we are doing,” he said. “We are forcing governments to
be more serious in the [European] Commission reviews of fiscal
deficits.”

Ordonez added: “At the national level, I think my country is
starting to work with a very [tough] fiscal consolidation, pension
reform, labor market reform. We need everything to restore confidence at
the Eurozone level and at the national level.”

–Johanna Treeck, jtreeck@marketnews.com; 00-49-69-720-142

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